‘Much healthier’ licensing model for NASCAR near

Seven months of negotiations have put NASCAR and its top teams
in position to create the first NASCAR Properties, a trust that will serve as a
centralized licensing agency for the sport.

The unnamed unit will operate as a one-stop shop for
licensees, but a key difference from other previously established
league-licensing divisions is that revenue will be distributed to the teams
based on sales and not a revenue-share agreement.

The licensing body is being called a trust because one body —
NASCAR Properties — will hold the rights and grant licenses on behalf of the
teams. Participation by the teams will be voluntary, but the top teams such as
JR Motorsports, Hendrick Motorsports, Joe Gibbs Racing and Roush Fenway Racing
are in, as are several others that own valuable rights, like Dale Earnhardt
Inc., which manages the late racing icon’s legacy business.

The teams have agreed to include only certain categories so far, like apparel. Which categories are
in and which are out remains to be determined.

“There are so many different organizations with so many
different issues that it takes a long time and it’s highly complex,” said Jeff
Steiner, general manager of DEI. “But the nature of discussions are positive
and it’s moving forward with very good collaboration from the teams.

NASCAR teams have managed
licensing rights in-house, leading
to confusion.

“This is going to be a much healthier model for licensees and
retailers.”

In the past, NASCAR teams managed their licensing rights
in-house — each team operates as an independent contractor, separate from the
sanctioning body. That model was considered cumbersome and confusing for
licensees because they had to negotiate five different contracts to get the
licensing rights to five different drivers. Rights to the NASCAR mark were a
separate conversation as well.

But in the new trust, those team, driver and NASCAR marks will
be available under the umbrella of NASCAR Properties, or whatever the trust is
eventually called, thus the one-stop shopping model.

Team executives involved in the formation of the trust say it
might take the rest of the spring to finalize the arrangement, but it’s been
called “imminent” by multiple sources. Talks began on Sept. 24 at NASCAR’s
offices in Charlotte and have continued with multiple meetings each month. All
of the top teams have been represented, while Paul Brooks, NASCAR senior vice
president, has mediated the negotiations.

The trust will be run by a board of industry licensing
executives, although it has not been determined how many will serve or how long
the terms will be. The board will mostly consist of team executives, although
officials from NASCAR also could be considered.

Never before have NASCAR’s teams and the sanctioning body
combined their rights into one entity, making the formation of a NASCAR
Properties a first for the sport.

“It’s long overdue,” said Joe Mattes, the vice president of
marketing and licensing at Dale Earnhardt Jr.’s JR Motorsports. “Teams realize
that we can’t continue on as independent contractors, at least in licensing.
There has to be a set of standards that we all work by.”

The negotiations to unify the licensing rights were prompted
by the financial troubles of Motorsports Authentics, the dominant licensee in
the industry. MA, which has been on the verge of bankruptcy for the past year,
owes millions to several teams. As part of the arrangement to create NASCAR
Properties, teams will forgive MA for most of its debt.

Industry insiders say that even the most ardent opponents of
MA have come to grips with losing that revenue. MA’s contracts with the top
teams like Hendrick Motorsports and Roush Fenway Racing guaranteed as much as
$3 million a year, but MA has been paying only a third to a half of the
guarantee to the teams.

MA’s die-cast car business will be spun off into a separate
entity and will be managed by a third party, industry sources said. Revenue
from the die-cast business will be shared among the teams as a way to satisfy
part of MA’s debt. MA is expected to continue as a much leaner company that
focuses strictly on trackside retail sales.

MA just two years ago took in more than $200 million in annual
revenue, but that number was cut in half in 2009 as the recession took a bite
out of sales and business plummeted.

“Hopefully this licensing strategy works and this can become a
testimonial for what can happen when teams pool their rights and work
together,” Mattes said. “Some teams are already doing that in other areas, like
engines and other equipment, so at least conceptually it’s a good thing.”